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Pensions Update

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This bulletin is a short update on the current situation regarding the Lifetime Allowance and obtaining information from NHS Pensions.

There is a wealth of information on the NHS Pensions website about pensions and allowances. If you wish to read more about the Lifetime Allowance, you can find this at: www.nhsbsa.nhs.uk/Pensions/4222.aspx

As a reminder, the Lifetime Allowance has been decreasing, as follows:

For those individuals with pension benefits accruing outside of the NHS Pension Scheme, the value of those private benefits need to be added to the value of your NHS pension benefits before comparing the total to the above limits.

The NHS Pensions website has a rough guide to who might be affected and it notes that a member would breach the limits in the following circumstances:

At 5 April 2014 (£1.5m to £1.25m) – an annual pension of £54,347 for a member of the 1995 section.

At 5 April 2014 (£1.5m to £1.25m) – an annual pension of £62,500 for a member of the 2008 section.

At 5 April 2016 (£1.25m to £1m) – an annual pension of £43,478 for a member of the 1995 section.

At 5 April 2016 (£1.25m to £1m) – an annual pension of £50,000 for a member of the 2008 section.

There are ways of protecting against the reduction in the Lifetime Allowance, such as Fixed Protection or Individual Protection, although the former is less popular as it means you can no longer make contributions into the scheme.

As we have mentioned before, in order to apply for Individual Protection, you need to obtain a valuation of your pension benefits and this is something that can only be calculated accurately by NHS Pensions. Unsurprisingly, they have been inundated by requests for valuations. This has produced delays in obtaining information and has also prompted them to bring in new charges. These charges came into effect on Monday 13 July 2016 and the fees need to be settled before the calculation/valuation will be prepared. The website has instructions on how to pay. In most cases a charge will apply for any calculation or valuation other than the Annual Benefit Statement that is made available to you via the Total Reward Statement portal.

The charge for supplying an Individual Protection 2014 or an Individual Protection 2016 valuation will be £120.

If you are concerned that you might be affected by the Lifetime Allowance, we would be happy to assist you in obtaining a valuation, for which you will need to pay the charge noted above. To apply for Individual Protection 2014, the valuation needs to be obtained and the relevant form submitted to HM Revenue & Customs by 5 April 2017.

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Key Contacts

Stephen Peak

Kelly Bretherick

I am a Client Relationship Partner in the Audit and Accounts Team specialising in professional firms, including solicitors, GP practices, chartered surveyors, architects, estate agents and insurance brokers.